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Fannie Mae - Primary Housing for Elderly Parents

Did you know that children wanting to provide housing for their elderly parents may be able to do so with the property being considered primary residence? 

If the parent(s) are on the loan, then the child would simply be considered a non-occupant co-borrower, and standard qualifying guidelines would apply.

If the parents choose NOT to be on the loan, submit the following with the loan file:

  • The child should indicate on the 1003 (line L in section VII. Declarations) “Yes” – that they intend to occupy the property as their primary residence, even if they already own a primary residence.
  • A letter of explanation must be provided indicating that the child’s existing primary residence is being retained, and that the subject property “primary residence” is being purchased for the benefit of the parent who is not on the loan and unable to qualify.
    • The payment for the subject property “primary residence” should be the top ratio (Housing to Income).  For the retained primary residence, in the REO section of your LOS the status should be left blank (i.e. do not list as second home or investment property) and indicate in the comments section that the property is being retained as their primary residence, and subject property is for elderly parents, per Fannie Mae’s occupancy guidelines.  This will allow the payment to be included in the total DTI calculation.

Note:  The payment for the subject property “primary residence” should be the top ratio.  For the retained primary residence, in the REO section in Encompass, the status should be left blank (i.e. do not list as second home or investment property” and indicate in the comments section that the property is being retained as their primary residence, and subject property is for elderly parents, per Fannie Mae’s occupancy guidelines.  This will allow the payment to be included in the total DTI calculation.

Please refer to the “Primary/Principal Residence” topic in the Fairway Guidelines for additional guidance.